Tags: China | Nkorea | investment | deal

China Plotting NKorea Investment Deal

Monday, 15 Feb 2010 10:39 AM

SEOUL — China is arranging a huge foreign investment deal to revive North Korea's faltering economy amid an international drive to coax Pyongyang back to nuclear disarmament talks, a report said Monday.

Beijing is helping the communist state obtain more than 10 billion dollars in investment from Chinese banks and multinational firms, the South's Yonhap news agency said.

The deal was discussed a week ago when North Korean leader Kim Jong-Il met China's senior communist party official Wang Jiarui, it said.

A North Korean body known as the Korea Taepung International Investment Group plans to conclude the deal in March, Yonhap said, adding that Chinese capital would account for 60 percent of total investments.

Yonhap did not give any further details on what the investment plan would involve.

It said China was brokering the deal because North Korea is demanding economic aid from Beijing along with other incentives before returning to the six-party nuclear forum which the North quit last April.

A Chinese foreign ministry spokeswoman declined to comment on the report. South Korean officials were not available for comment.

China appears to be using economic aid as leverage in negotiations with North Korea, Dongguk University professor Kim Yong-Hyun told AFP.

"China could provide humanitarian aid to help North Korea revive its economy before six-party talks resume," the professor said.

"However, any massive economic assistance or investments from China may come only after it gets strong commitment from Pyongyang about denuclearisation."

Chinese and North Korean nuclear negotiators held several days of talks in Beijing last week aimed at restarting the forum chaired by China since 2003.

Media reports said Pyongyang was sticking to its two conditions for coming back: a lifting of sanctions and a US commitment to discuss a formal peace treaty.

Washington, Seoul and Tokyo say the North must return unconditionally and show commitment to scrapping its nuclear programme before other issues are dealt with.

Tough United Nations sanctions brought by the North's pursuit of ballistic missiles and atomic weapons have hurt its economy, restricting the communist state's access to international credit.

The nation has relied on foreign aid to feed its people since it suffered a devastating famine in the 1990s.

In recent years the regime has tried to reassert state control over the economy by restricting private markets, which sprang up after the state food distribution system collapsed in the famine years.

Last November it decreed a currency revaluation to flush out private wealth but analysts said the move backfired disastrously, intensifying food shortages and fuelling inflation.

The North is relaxing some curbs on the markets because of mounting public anger, South Korea's spy agency has said.

Copyright © 2010 AFP. All rights reserved.

© Copyright 2018 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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